Samsung Set To Launch 'Samsung Pay' With Galaxy S6 at MWC

Can Samsung create a payment service similar to Apple Pay and be successful?

Samsung has already announced it will release its next flagship Galaxy S6 during the upcoming MWC next month. Serious rumors from different sources indicate that the Korean giant will also introduce at the show its version of a global mobile payment system, which has already been given the moniker "Samsung Pay."

Can Samsung create a payment service similar to Apple Pay and be successful?

I believe they can, but they need to be bold. Samsung is faced with a big challenge, but also an enormous opportunity.

Since the introduction of the iPhone 6 and Apple Pay back in September Apple has been able to capture a significant piece of the US mobile payments market, to almost catch up with Samsung in number of smartphones sold in Q4 2014, and to disrupt the contactless payment ecosystem.

While the revenue that Apple is collecting from fees associated with Apple Pay is still small, the “cool factor” of the technology has helped the Cupertino company to position the iPhone 6 as the best selling smartphone ever released. Apple Pay has played a significant role in the success of the new iPhone.

Samsung can’t afford to give away the lead in the smartphone market, and a payments system tailored to customers is a key factor. While there has been a significant number of pilots involving carriers, banks and some smartphone manufacturers, none has had the immediate customer acceptance that Apple Pay reached during the past six months in the US.

Two years ago, during the Mobile World Congress, Samsung and Visa Europe announced an agreement to develop a NFC payment system that could be incorporated into Samsung’s upcoming Galaxy smartphones. A similar agreement was also reached between Samsung and Mastercard three months later, in May 2013. It was expected that Samsung was going to introduce such a system last year with the Galaxy S5.

But the complicated mobile payments market, the resistance of the carriers, the complexity of the provision of the payment systems, plus security concerns, have stopped Samsung and other OEMs from introducing an independent, easy to use, NFC tap-and-pay service.

The introduction of NXP’s PN66T, a module that combines a highly secure Smart MX2 element (P61), near field communications (NFC) radio, operating system and trust provisioning, can change all that. The PN66T is Europay, MasterCard, and Visa (EMVCo) certified, and also supports American Express ExpressPay, thus fully covering the three big credit card companies, ensuring the compatibility and interoperability with existing and future payment solutions.

It has been rumored that Samsung will incorporate the PN66T into the Galaxy S5, but not for all versions. Samsung could be building different versions without the module for markets not ready for mobile payments.

The biggest opportunity for Samsung now could be the European market. Europe is not yet serviced by Apple Pay, but has the highest number of contactless cards and payment terminals in the world. Because EMV has been in use for more than 10 years in Europe the infrastructure is ready for NFC mobile payments. As of last September, there were 1.5m contactless terminals across Europe, six-times more than in the US, and a fifth of all credit cards in circulation were contactless.

Samsung will have to resist the strong pressure from the carriers to control the payments ecosystem. For several years cellular carriers have been trying to launch mobile payment systems together with financial institutions, using their SIM cards as security modules.

In the past pressure from the cellular carriers forced several Android manufacturers to drop or disable NFC secure modules on their phones, so carriers could deploy NFC services such as payments or transit, on their SIM cards. This is great for carriers but very limiting for consumers and providers.

For Samsung to be successful with their “Samsung Pay” they need a system that users can trust, that banks are eager to sign onto, and that leave carriers out of the equation, as Apple did. Otherwise it will be another “pilot” without real customer acceptance.

Valued at less that $100 million?!? I'm certain Google has that kind of money in their couch... they probably just have to reach down under a cushion or two, won't even need to tip it over.

Probably a good deal for Softcard, too. Right now, they're only working with American Express, Wells Fargo, and Chase. I'd expect that to merge resources with Google Wallet, though you never quite know with Google -- sometimes they leave a new acquisition alone, sometimes they "Googleize" it.

Sure, good point. Apple grabbed direct control of their hardware warky on, so what they say happens. Google doesn't sell directly to the telcos, and no hardware company that does had the leverage that Apple did.
But I'm also wondering if it's just better timing. The network of RFID pay terminals is already in place. The telcos don't seem to have made much progress on their own pay networks... maybe "ISIS" just wasn't a good name?. They don't block Google Pay anymore... that was a huge fuss when I got my Galaxy Nexus, no big deal on the LG that replaced it.
And of course, Apple's been advertising Apple Pay. Despite some of the Apple Pay setup app being virtually identical to Wallet, and Android having three years of compatible phones, they have not done a great job at spreading the word. But it works great already -- not sure what Samsung Pay is going to deliver that's better.

Good question. I believe the answer is that Apple has the power to dictate the rules to the carriers, Samsung doesn't.

Apple launched Apple Pay when the market for mobile payments was ready for taking. The NFC contactless POS and credit card standard is implemented and Apple got help from NXP and the banks to launch the service.

Carriers had no option but to accept it and continue to offer the iPhone, while they have been blocking any attempt of other manufacturers to launch a payment service.

I'm eagerly waiting to see Samsung's announcement. It is possible that Samsung will introduce its payment application in selected markets only...

Seriously. And why it is ALWAYS Apple. Ok, sure, Apple often figures out how to make what everyone else has look sexy. And when they actually do something unique, maybe they should be copied.

But if Samsung had called it Samsung Wallet, they could have launched it 2 years ago and got a big jump on Apple. Sure, that would have required them copying Google for a change... but given all of the apps on any given Galaxy device, they've always shown they can copy Google. What's the hold-up?

Very much doubt Samsung can compete in mobile payment at same level as Apple. A more likley scenario is they have done a deal with someone like LoopPay with its magnetic secure transmission service linked to the fingerprint sensor being inegrated into the S6. At least it will differentiate the two.